Question

The St. Lucia Blood Bank, a private charity partly supported by government grants, is located on the Caribbean island of St. Lucia. The blood bank has just finished its operations for September, which was a particularly busy month due to a powerful hurricane that hit neighboring islands causing many injuries. The hurricane largely bypassed St. Lucia, but residents of St. Lucia willingly donated their blood to help people on other islands. As a consequence, the blood bank collected and processed over 20% more blood than had been originally planned for the month. A report prepared by a government official comparing actual costs to budgeted costs for the blood bank appears below. Continued support from the government depends on the blood bank's ability to demonstrate control over its costs. Variances St. Lucia Blood Bank Cost Control Report For the Month Ended September 30 Actual Planning Results Budget Liters of blood collected 680 500 Medical supplies $ 8,021 $ 5,875 Lab tests 9,378 7,200 Equipment depreciation 1,880 1,600 Rent 1,300 1,300 Utilities 296 270 Administration 13,885 13.700 Total expense $ 34,760 $ 29,945 $ 2,146 U 2,178 U 280 U 26 U 185 U $ 4,815 U The managing director of the blood bank was very unhappy with this report, claiming that his costs were higher than expected due to the emergency on the neighboring islands. He also pointed out that the additional costs had been fully covered by payments from grateful recipients on the other islands. The government official who prepared the report countered that all of the figures had been submitted by the blood bank to the government; he was just pointing out that actual costs were a lot higher than promised in the budget. The following cost formulas were used to construct the planning budget: Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Cost Formulas $11.759 $14.409 $1,600 $1,300 $270 $12,900 + $1.600 Required: 1. Complete the performance report for September using the flexible budget approach. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Do not round intermediate calculations and round your final answers to nearest whole dollar.) St. Lucia Blood Bank Flexible Budget Performance Report For the Month Ended September 30 Flexible Spending Variances Budget Activity Variances Actual Results $ 8,021 9,378 Medical supplies Lab tests Equipment depreciation Rent Utilities Administration Total expense 1,880 1,300 296 13,885 34,760 Planning Budget $ 5,875 7,200 1,600 1,300 270 13,700 $ 29,945 $

Answer 1

Correct Answer:

St. Lucia Blood Bank
Flexible budget performance report
For the month ended September 30
	Actual Results	Spending variance		Flexible budget	Activity variance		Planning budget
Liters of blood collected	680	0		680	180		500
Medical supplies	$                   8,021.00	$                 31.00	U	$             7,990.00	$                2,115.00	U	$           5,875.00
Lab tests	$                   9,378.00	$            414.00	F	$             9,792.00	$                2,592.00	U	$           7,200.00
Equipment depreciation	$                   1,880.00	$               280.00	U	$             1,600.00	$                             -	N	$           1,600.00
Rent	$                   1,300.00	$                        -	N	$             1,300.00	$                             -	N	$           1,300.00
Utilities	$                      296.00	$                 26.00	U	$                 270.00	$                             -	N	$               270.00
Administration	$                13,885.00	$            103.00	F	$           13,988.00	$                   288.00	U	$         13,700.00
Total expense	$                34,760.00	$            180.00	F	$           34,940.00	$                4,995.00	U	$         29,945.00

End of answer.

Please give a thumbs-up, it will be highly appreciated.

Thanks.